Daily Archives: February 24, 2010

Someone, somewhere, has been counting. They have counted, for example, the number of times Ben Bernanke has said ‘inflation’ in the past few years in his testimony to Congress (it has been falling, and the word ‘deflation’ doesn’t show up at all*).

Discussion of institutions is rising fast, however. ‘Federal’ and ‘reserve’ are the biggest winners – ‘federal’ was said 46 times in the latest speech, almost 7 times the wordcount three years ago, and double the wordcount six months ago. ‘Congress’ and indeed ‘institutions’ are new entrants, as is ‘system’. ‘Facilities’, not shown on chart, made a strong entrance this year, with a count of 18. Read more

“You know Bernanke did not say very much, when there is an active debate as to whether weak new home sales or Bernanke’s testimony was moving markets more. Oddly the home sales data may have even won that contest,” wrote Alan Ruskin, chief international strategist at RBS.

But his testimony to Congress wasn’t limited to his written statement. Among his comments during the question and answer period:

Bernanke on the cost of interest rates on reserves: Unless I’m mistaken, this is the first time Mr Bernanke has addressed the cost of paying interest on bank reserves. He has said previously that it will likely be the most important means of tightening monetary policy when it’s time to begin tightening, but not estimated its cost. In the hearing, he said the cost would be ‘within tens of basis points’ of increasing the federal funds rate. “[It's] not a tremendous difference.”

Ben Bernanke will welcome an audit, defend the Fed’s independence and make a case for the Fed’s role in regulation when delivering his monetary policy report to Congress today.

Temporary inventory sell-offs contributed to 4 per cent growth in the second half of last year, Mr Bernanke will say in this speech. Demand must grow in the private sector to plug the gap when the inventory bounce ends. Private sector demand is already growing at a moderate pace, driven in part by a recent pick-up in consumer spending and business investment in equipment and software. Read more

The Polish central bank has kept the 7-day reference rate on hold at 3.5 per cent, as expected. The economy has been growing while inflation has been falling, making the timing of a rate rise uncertain.

This month’s board contained three new members, whose relatively bearish views made a rate rise this month less likely. Traders are also becoming more cautious, pricing in a 0.7 percentage point rise in the next six months. Last month they were pricing in a 0.8 percentage point rise. Read more

The People’s Bank of China’s current account increased by 69 per cent during 2009, ending the year at $42.6bn, while its financial account enjoyed a net inflow of $14bn, the first net inflow since 2005. Taiwan News said the record balance surplus reflected an increase in the bank’s reserve assets – which are likely to rise further this year as China uses banks’ reserve ratios as a means to limit the amount of money in the economy. The last such move was on February 18.

Russia is getting richer. The rouble is gradually being allowed to strengthen, which will allow Russians to import more, addressing their trade surplus. The process is being carefully managed, however, with the central bank cushioning each move.

Local dealers are again reporting a $700m purchase of foreign exchange with a 5 kopeck reduction in the floating rouble band boundary. (A kopeck is one hundredth of a rouble.) Read more

Neighbours Namibia and Botswana have kept their main rates on hold today. Namibia has kept its repurchase rate at 7 per cent for the fourth consecutive month, while Botswana has kept its main lending rate at 10 per cent. Namibia and Botswana neighbour South Africa, the continent’s largest economy, and Namibia generally follows South African monetary policy. South Africa kept its rate at 7 per cent for the fourth month, on January 26.

Inflation in all three countries is at similar levels, albeit in different directions. South African inflation ran at 6.2 per cent in January, above the 3-6 per cent range for the second month, but falling toward it from December’s level of 6.3 per cent. Inflation in Namibia – also above target but slowing – is currently about 6.3 per cent. Botswana has just exceeded its target range of 3-6 per cent, with inflation rising to 6.1 per cent in January. Read more

China might soon be littered with incomplete building projects and half-built roads.

Chinese banks have been ordered to trawl through existing loan agreements that are ultimately used by local governments to raise funds – and stop lending to those projects backed only by expected fiscal revenues. The aim is to reduce the chance of default. Read more

Archived - Money Supply

Economics blog

About this blog

Blog guide

Welcome. If you have yet to register on FT.com you will be asked to do so before you begin to read FT blogs. However, our posts remain free.

Opinions on market-moving economics and central banks around the world.

The Money Supply team

Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS

Claire Jones is the FT's Eurozone economy correspondent, based in Frankfurt. Prior to this, she was an economics reporter in London. Before joining the Financial Times, she was the editor of the Central Banking journal. Claire studied philosophy and economics at the London School of Economics. RSS

Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS

Sarah O’Connor is the FT’s economics correspondent in London. Before that, she was a Lex writer, covered the US economy from Washington and the Icelandic banking collapse from Reykjavik. Sarah studied Social and Political Sciences at Cambridge University and joined the FT in 2007. RSS

Ferdinando Giugliano is the FT's global economy news editor, based in London. Ferdinando holds a doctorate in economics from Oxford University, where he was also a lecturer, and has worked as a consultant for the Bank of Italy, the Economist Intelligence Unit and Oxera. He joined the FT in 2011 as a leader writer. RSS

Emily Cadman is an economics reporter at the FT, based in London. Prior to this, she worked as a data journalist and was head of interactive news at the Financial Times. She joined the FT in 2010, after working as a web editor at a variety of news organisations.
RSS

Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS

Ben McLannahan covers markets and economics for the FT from Tokyo, and before that he wrote Lex notes from London and Hong Kong. He studied English at Cambridge University and joined the FT in 2007, after stints at the Economist Group and Institutional Investor. RSS